Post-pandemic entrepreneurial predictions

Billions of global citizens face some form of lockdown restrictions as governments try to contain the spread of the Covid-19 virus that originated in Wuhan, China, in 2019. Given nearly two and a half million reported infected cases and likely millions more as yet undetected, fears grow for how the cessation of movement will impact economies not just in the immediate term, but also post-pandemic.

The International Monetary Fund predicts a staggering recession like the world has not experienced since the Great Depression. Clearly, many comparisons can be drawn between the present coronavirus pandemic and the Great Depression of 1929 through 1939. The Great Depression was awful, deep, and long while the wretched ripple- on effects lasted for a decade. Growing up, my grandparents shared their difficult memories with me and my younger brother about how life was like during the 1930s.

The excesses of the 1920s were marked by wild stock market speculation, overspending on credit, and lax government regulations. The stock market collapse of 1929 in wide selloff panics over the course of a week eliminated the personal investments of millions of people. The Great Depression touched nearly every country on earth. Consumer spending and new investment dropped, half of all banks failed whereby people lost all their savings, and industrial production dried up as tens of millions around the world lost their jobs. Large parts of America also experienced a ten-year drought that exacerbated their depression. The period became known for sacrifice, suffering, community togetherness, and great resiliency. Massive government interventions, restructuring and and public infrastructure projects helped eventually stem the tide of the depression.

The painful experiences gave a lingering impression in the minds of that generation that even when everything is going well, things could still fall apart at any point. This generation famously diversified its savings, with an inherent distrust of banks, even hiding cash in their mattresses. They stockpiled products just incase they became unavailable. Their frugal habits stood in stark contrast compared to the decadence of the generation born immediately following the Great Depression. Despite the difficult decade, creativity and innovation still blossomed. The proverb “necessity is the mother of invention” certainly rang true during the Great Depression. Radar, scotch tape, ballpoint pens, long-playing phonographs, car radios, neoprene, frozen foods, colour and talking movies, analogue computers, jet engines, electron microscopes, polaroid instant photos, zoom lenses, radio telescopes, FM radios, road reflectors, tape recorders, nylon, canned beer, voice recognition machines, photocopiers, strobe lights, Teflon, freeze-dried coffee, helicopters, and cartoons were all inventions during the Great Depression.

In today’s Kenya, we have a painful external shock that can trigger a depression: the coronavirus and commensurate lockdown. But we, like in Great Depression America, also hold a negative natural moderating effect: the persisting locust invasion. What can entrepreneurs expect during this trying time and the post-pandemic recovery? We have three components to creativity. The lockdown and curfew create induced free time for many. Free idle time and solitude boosts creativity. Also, the restrictions and fears create a basis for necessity that, as mentioned above, increases invention. Finally, pandemics and economic upheaval create swift social changes. Quick entrepreneurs can capitalise on such changes.

First, significant entrepreneurial opportunities will exist for those who create products that make people feel safer. Safer in their homes. Safer on the streets. Safer going to work. In the short-term, we clearly see sanitiser and mask sellers experience massive sales peaks. This generation alive today will likely stockpile sanitiser and masks in their homes for the rest of their lives as a precaution even to the point that the next generation not yet born will wonder what is wrong with us.

But post-pandemic, much room for innovation exists. Perhaps as yet undeveloped germ detectors, self-cleaning surfaces, virus-free packaging, long distance temperature detectors, among thousands of other potential ideas will likely hit the markets. The mental anguish from this pandemic will drive pro-safety buying behaviour for the rest of our lives for those who have lived through this crisis.

Similarly, as explained above, the Great Depression impacted the spending behaviour of that generation permanently.

Second, seemingly distasteful given the current crisis, but the longstanding quote by Warren Buffet stands true: buy when there is blood in the streets. There will be great deals as the Kenyan economy recovers, especially in real estate. People desperate to offload real estate because of urgent crisis-induced cash needs will have to lower prices. Also, underwriting by banks may loosen property buyers as banks get desperate for people to service defaulted property-backed mortgages.

Third, as classrooms to family reunions to work meetings all moved online with Covid-19, massive opportunities exist for entrepreneurs to create even more stable and creative online experiences post-pandemic as people become more accustomed to an online life. Expect thousands of new geo-tagged types of connecting apps, interactive websites, among others.

Fourth, demand for luxury goods will crash. Luxury and discretionary goods typically face the swiftest declines in economic contractions as consumers repurpose their spending towards survival and necessity instead of luxury. Further, luxury and discretionary goods will likely lag behind the rest of the economy to finally pick up.

Fifth, while tourism has collapsed during this pandemic, pent up bored citizens around the world will likely go out in large numbers post-crisis. Tourism will pick up in domestic markets first as distrust over airline air circulation safety and cruise ship contamination fears persist. Entrepreneurs who can combine domestic tourism expected surges with the newfound concerns for safety will reap hefty rewards. Sixth, the new innovations post-pandemic will create an investment bonanza for investors. Have extra savings sitting around when the crisis ends? Then inquire from the iHub, USIU-A, SNDBX, and other entrepreneurial incubators and accelerators whether you can sit on investor panels so you can invest in the latest technologies, creative businesses, and new ideas of a post-coronavirus world. You could experience exponential growth in your investments.

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Dr Scott may be reached on [email protected] or on Twitter: @ScottProfessor